Audit Results Published For Former Councils’ Procurement Practices

20 October 2015

The result of an internal audit investigation into the procurement practices of former councils has been published by Mid Ulster District Council.

While considered to be legacy issues relating to the previous organisations, the Council sought the investigation after it expressed concerns at media reports of the procurement methods used by the former Magherafelt District Council and wished to investigate to establish the facts.

The report examined the procurement of architectural services by the former Magherafelt District Council, as well as a sample of capital and revenue payments greater than £5,000 across all three legacy Councils (Cookstown, Dungannon and Magherafelt) between 1 April 2012 and 31 March 2015, focussing specifically on any ‘direct award contracts’ made in the period.

Key findings included:

Of the sample of 43 payments above £5,000, equating to approximately 70% of the former councils’ expenditure, 12 were categorised as ‘Direct Award Contracts’.

A further 4 procurements were selected from the Direct Award Registers of Cookstown and Dungannon. Each was found to have been formally documented, with a rationale provided, to have had Director approval and been reported to the relevant Audit Committee.

2 direct awards were made by Magherafelt for bathroom products and sanitary products, and for drainage works, documented as a fair valuation via 3rd party specialist advice.

2 related to the provision of IT services. These were identified as being beyond procurement limits in the former Magherafelt council, but considered to be value for money. In Dungannon these were recorded in the register of Direct Award Contracts and reported to the Audit Committee.

3 related to electrical maintenance and supplies, which when taken individually or aggregated, exceeded procurement thresholds in all 3 former councils. However, some services had been subjected to quotations. Others had been competitively tendered and continued on a documented value for money basis.

3 related to the procurement of legal advice services which had not been subject to competition in the former councils, in 2 cases because of the imminent reform of local government.

2 related to hospitality services which were not competitively procured in Magherafelt and which, when aggregated in Cookstown, should have been subject to quotations.

The procurement of architectural services for the new Seamus Heaney facility and two further appointments to other capital projects had been made in the absence of a formal procurement process.

Appointments for construction and design contractors for the Seamus Heaney project had, however, been properly procured.

Speaking after a meeting to consider the findings, Chair of Mid Ulster District Council’s Audit Committee, Councillor Trevor Wilson, said:

“We were committed to establishing the facts, with a view to ensuring that any issues which arose in the former councils could be documented and used as a yardstick against which to measure the robustness of our own policies and procedures.

“The investigation demonstrates that in the vast majority of cases, contracts were properly awarded. However, it also highlights instances where procurement could have been handled differently.

“While the use of ‘direct award contracts’ is acceptable as long as the rationale is clear and reasonable, and the awards are properly recorded and authorised, the results are clear that in certain cases, there was an over-reliance on their use”.

The report acknowledges that the new Council continues to apply best practice in the application of its policies and procedures, ensuring that any contracts which it enters into are evaluated at their conclusion, and that Direct Award Contracts continue to be managed in line with the Council’s policy, which requires approval and authorisation.

The Council will subject any contracts or recurring payments which do not meet with the Council’s procurement policy to a fresh competitive exercise where appropriate.

Vice Chair of the Committee, Councillor Caoimhe O’Neill, said:

“We believe that our approach to procurement as a new organisation is robust and the report certainly recommends that we continue to operate to the procedures and standards which we have already established.

“Our use of direct award contracts will be strictly monitored and the Audit Committee will be working to ensure the application of the policy and the overall effectiveness of our governance arrangements”.

The internal audit report on the procurement practices of the former councils is available to view by clicking here.